Quote:
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Originally Posted by Yakk
Compare OWN_COST to RENT_COST.
If OWN_COST > RENT_COST, then we have a price-inversion, and stay the hell out of that real estate market.
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The inverse however RENT_COST < OWN_COST is a very valid indicator of an abundance of speculative housing buys (inflating the sale prices), resulting in an abundance of vacant homes, and the over availability of rental's.
In fact, I think that same Time article (it might have been USNEWS&World Report though) discussed this very trend.
Fairfax and Louodn Counties, VA and even the 'burbs of Las Vegas being great examples. Lot's of new home starts, because of excessive new home purchases by speculators, who end up with vacant properties. All three have low rental costs.
Food for thought.
Man this economy stuff is mind boggling isn't it?
-bear